Government takes steps to curb exports, hoarding of onions

New Delhi: The government Wednesday hiked the minimum export price of onions by 67 percent and brought it under the Essential Commodities Act to curb hoarding as prices soared in the domestic markets.

The Cabinet Committee on Economic Affairs chaired by Prime Minister Narendra Modi decided to include onions and potatos under the purview of stock holding limits under the Essential Commodities Act, 1955.

The step will empower the state governments to undertake de-hoarding operations and to control the prices of onions and potatoes, Telecom and Law Minister Ravi Shankar Prasad told media persons here after the cabinet meeting.

Earlier in the day the commerce ministry announced that an Inter-Ministerial panel has unanimously decided to hike minimum export price of onions by 67 percent to $500 per tonne in a bid to discourage exports and improve local supplies.

The government has taken tough steps for the second time in nearly two weeks to curb onion exports. With a view to discouraging onion exports, government had June 17 set a minimum price of onion exports at $300 per tonne.

After the increase, the minimum export price of onions translates to Rs.30 per kg. Onion prices have soared in the domestic markets in the recent weeks and the vegetable is now sold for Rs.20-30 per kg in retail markets.

"I request the people that there is no need to panic. The government is committed to control the price rise," Minister of Law and Telcom Ravi Shankar Prasad told media persons after the cabinet meeting here.

Prasad also expressed hope that monsoon would improve in the coming days that would have positive impact on food prices.

"Let's not panic rain god will smile on us...Government hopes that the rain will be ok," he said.

The decision to hike the minimum export price was unanimously taken by an Inter-Ministerial Committee at a meeting here June 30.

"Keeping in view the rising retail and wholesale prices and delayed monsoon, the Committee unanimously decided to fix the minimum export price at $500 per tonne which translates to Rs.30 per kg with a view to arresting domestic price rise and augmenting domestic supply," a commerce ministry statement said.

The commerce ministry said there was "no appreciable decline in the exports of onions" despite the $300 per tonne minimum export price set June 17.

Rise in general price level, especially in the prices of onions and potato, has been a big worry for Modi government.

Finance Minister Arun Jaitley said controlling inflation is one of the major challenges confronting the government.

India's wholesale price-based inflation rose to a five-month high of 6.01 percent in May against 5.20 percent in the previous month due to a sharp jump in food and fuel prices.

Retail inflation measured in terms of the Consumer Price Index (CPI) was recorded at 8.28 percent in May, according to the latest government data.

The Centre has convened a meeting of state food ministers Friday to discuss "measures to check unreasonable increase in prices of some food items".

Finance Minister Jaitley will chair the meeting to be held in the national capital.

"The prices of some of the commodities, especially onion and potato, are a matter of concern. It is very urgent to discuss the measures to be taken to address the issue," the food ministry said in a statement Tuesday.

"Steps to prevent hoarding of these commodities and plans for distribution of specific essential items through public channels and improving other supply channels will be discussed in the meeting," the statement said alluding to the state food ministers' meeting.